Program Review and Investigations Committee




<MeetMDY1> May 13, 2004


The<MeetNo2> May 13, 2004 meeting of the Program Review and Investigations Committee was held at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Greg Hager, Committee Staff Administrator, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Katie Stine, Co-chair; Representative Charlie Hoffman, Co-chair; Senators Charlie Borders, Brett Guthrie, and Dan Seum; Representatives Adrian Arnold, Sheldon Baugh, Dwight Butler, Rick Nelson, Ruth Ann Palumbo, Dottie Sims, and Jim Thompson.


Guests:  Vickie Bourne, Executive Director, Office of Transportation Delivery; Cindy Stoops, Branch Manager, Division of Financial Management, Department for Medicaid Services, and Pam Shepherd, Federated Transportation, Region 10, Fayette County, Kentucky.


LRC Staff:  Greg Hager, Committee Staff Administrator, Lynn Aubrey, Kara Daniel, Rick Graycarek, Tom Hewlett, Margaret Hurst, Van Knowles, Erin McNees, Cindy Upton, and Susan Spoonamore, Committee Assistant.


Dr. Hager explained that the first order of business would be the election of committee co-chairs.


Rep. Charlie Hoffman was nominated as House Co-chair of the Program Review and Investigations Committee, upon motion made by Rep. Palumbo and seconded by Rep. Arnold.


Rep. Charlie Hoffman was elected as House Co-chair by acclamation, without objection, upon motion made by Rep. Thompson and seconded by Rep. Butler that nominations cease and that he be elected by acclamation.


Sen. Katie Stine was nominated as Senate Co-chair of the Program Review and Investigations Committee upon motion made by Sen. Borders and seconded by Sen. Guthrie.


Sen. Katie Stine was elected Senate Co-chair by acclamation, without objection, upon motion made by Sen. Seum and seconded by Sen. Guthrie that nominations cease and that she be elected by acclamation.


Minutes of the December 17, 2003 meeting were approved, without objection, by voice vote upon motion made by Rep. Baugh and seconded by Sen. Guthrie.


Rep. Hoffman welcomed Rep. Rick Nelson and Rep. Jim Thompson to the committee, replacing Rep. Pullin and Rep. Coleman, respectively.


Rep. Hoffman also welcomed new staff members Van Knowles and Rick Graycarek.


Tom Hewlett, Program Review staff, presented an overview on the report Human Service Transportation Delivery: System Faces Quality, Coordination, and Utilization Challenges. He stated that the program  began as an Empower Kentucky project in 1998, with the intent to limit cost growth and control the fraud and abuse that was reported to be prevalent in the previous nonemergency Medicaid transportation program. Mr. Hewlett explained that under the Human Service Transportation Delivery (HSTD) program, each broker received a payment for each Medicaid recipient in his or her region, and that the payments varied by region from about $5 to more than $8 per month. He stated that in exchange for the payments, the brokers operated nonemergency transportation programs in the 15 regions of the state. He said that the network of regional brokers contracting with the state under a capitated payment system appeared to be successful in containing cost growth. He also stated that incidents of fraud and abuse were much less evident in the HSTD program.



            Rep. Arnold asked if there was a specific reason for the large increase in the number of annual trips between 1998 and 2003.      Mr. Hewlett replied that in 1998 there was only one broker operating; the rest of the state still used the voucher system. He said that the number of trips increased as the broker system was phased in. In 2001/2002, the program began to stabilize, and the rate of cost growth had been restrained and the cost per trip had been decreasing.


Sen. Stine asked for clarification regarding the actual growth rate. Mr. Hewlett stated that the rate of growth had been hard to determine because Region 6 (Louisville area), which has a large population of eligible riders, came into the program in 2002. Shortly thereafter, the broker for Region 6, CTG, declared bankruptcy.  A new broker for Region 6 did not come back online until May 2003. He said that it would be another year or two before staff could get an actual estimate on the rate of growth in trips.


Sen. Stine asked if staff had been able to determine a growth rate for the rest of the state, excluding Jefferson County.


Mr. Hewlett stated that staff would provide that information to the committee.


Mr. Hewlett explained that each regional broker contracted with transportation providers in his or her region in order to provide transportation to eligible recipients. He said that the brokers operated call centers taking requests for trips and then allocated those trips to the different transportation providers in their region. He stated that some brokers also provided transportation services.

Mr. Hewlett stated that HSTD primarily served Medicaid recipients who did not own a car. The program also included patients who could walk from the taxi or the car  into the doctor’s office without assistance, non-ambulatory patients, and those who were confused as to date and location. He stated that the program also served a small number of clients for the Department of the Blind and the Department for Vocational Rehabilitation. He said that the program did not provide stretcher or emergency services.

He stated that the managed care approach had been adopted as a cost-saving measure, so it was important that monitoring occur to ensure that the quality of services was not adversely affected. 


Sen. Stine asked if the brokers who also provided transportation were in competition with other transportation providers. Mr. Hewlett stated that the brokers who provided transportation would have to have a contract with other providers in the system.


Sen. Stine asked if staff was able to determine if the brokers who were also operating as providers had any advantages over other providers in the region. Mr. Hewlett stated that the report contained a recommendation asking HSTD to improve their data collection efforts in order to address that issue accurately.


Rep. Baugh asked what was the incentive for a non-profit agency to reduce its costs. Mr. Hewlett stated that if a non-profit agency reduced its costs, then it would get to keep anything above operating costs, which could be reinvested in equipment or facilities. 


Rep. Baugh asked if a non-profit agency could authorize a governing body or another entity to do the same thing.  Mr. Hewlett stated that they could do that, but by reducing their operating costs it would allow them to generate extra revenue.


Rep. Baugh asked if the bid specifications for a non-profit agency and a for-profit agency were the same. Mr. Hewlett explained that each region was required to go through an RFP process.


Rep. Baugh asked if there was a requirement for bonding on bid contracts. Mr. Hewlett stated that there was not a requirement for bonding.


Rep. Baugh asked if the lack of bonding was unique to the HSTD program. Mr. Hewlett stated that he did not know the answer to that question.


Sen. Stine asked if the report contained a recommendation to require bonding, and, if not, why. Mr. Hewlett stated that bonding had not been mentioned as an issue with persons that staff spoke with, nor did the issue come up in any of the surveys. He said that there were some bonding issues surrounding the bankruptcy of CTG in Region 6, which was an unique case.


Sen. Stine asked that if CTG had been bonded, would it have ensured that the people who were owed money got paid. Mr. Hewlett stated that bonding could have made a difference. He stated that other states had tried to obtain bonding, but because of the unknown quantity in the number of trips provided per month, they were unsuccessful in finding a company that would provide bonding. He said that a recommendation to include a bonding clause in the contract could be included in the contract if the committee requested the recommendation.


Mr. Hewlett introduced Vickie Bourne, Executive Director, Office of Transportation Delivery and Pam Shepherd, Federated Transportation, Region 10 broker.


Ms. Shepherd stated she had contacted several bonding companies, but no company would provide bonding. 


Ms. Bourne stated that companies refused to bond because the cap payment received each month by the broker was an unknown number. 


Rep. Baugh stated that he thought bonding would alleviate problems experienced in the past with brokers who were either not paying the providers or delaying payment for long periods of time.


Ms. Bourne stated that was a problem for the previous broker in Region 6. The subcontractor did not get paid.


Rep. Baugh stated that he was referring to Region 5.


Ms. Bourne stated that HSTD would continue making inquires of bonding companies.


Mr. Hewlett stated that in order to ensure the quality of services, staff recommended that HSTD conduct a more comprehensive survey to include more individuals and more regions. He also said that the telephone complaint line as well as the field and phone surveys appeared to be weak in identifying specific concerns. He stated that the report recommends the HSTD program to institute a quality improvement plan so that program managers could identify short-term and long-term targets for improvement. The plan would also show how quality monitoring and utilization measures could be used to improve the system.


Mr. Hewlett explained that Program Review staff had developed and circulated a client satisfaction survey of Medicaid recipients who had used the HSTD program within the first half of 2003. He said that the survey revealed that 43 percent of the riders indicated that they were satisfied and 45 percent of the riders indicated that they were very satisfied with the program. He stated that the survey also indicated that 25 percent of the riders did not know that they had a right to file a compliant. More than half of the remaining clients did not know how to file a complaint. He stated that the lack of understanding of the complaint process could affect services. He cited as an example the fact that better awareness of the complaint process would have likely resulted in more legitimate complaints about the 72-hour requirement for phoning in requests for rides. Exceptions to the rule are allowed, but he stated that staff’s survey revealed that some of the trip requests may have been inappropriately denied. 


Mr. Hewlett said that the report recommended that:

·        Medicaid Services and OTD  should ensure that rider satisfaction surveys and survey methodology are redesigned to obtain valid, generalizable results;

·        Medicaid Services and OTD should develop a quality improvement plan;

·        OTD should maintain a database of the number and types of errors,  with brokers held accountable for the accuracy of the data they submit; and

·        OTD should match broker financial statements against encounter data to verify accuracy.



Mr. Hewlett said that the inefficiency of grouping of trips remains a problem in some regions. He stated the Program Review survey indicated that some providers were still concerned about distribution of trips by brokers. He said that providers were concerned that some brokers could be shifting higher paying trips to their own business or to their favorite providers. He said that House Bill 488 allows the freedom of choice rule for category 07 (disoriented) and 08 (nonambulatory) recipients. Rather than having a regional broker assign the trip, those recipients get to choose who will provide transportation services to them. Besides limiting the broker’s ability to efficiently coordinate trips, these types of trips are generally paid at a higher rate, making these trips more desirable.


He stated that the report offered three recommendations to improve the coordination of services:


·        The Office of Transportation Delivery should examine the current rate structure for transportation providers in conjunction with representatives of brokers and transportation providers.  603 KAR 7:080(17) provides criteria for transportation provider rate setting which should be uniform, simple, adequate and provide incentives for efficient grouping of trips. 

·        The Office of Transportation Delivery should periodically survey transportation providers to determine if they feel rides are being properly scheduled and equitably distributed.

·        Any decision to alter the freedom of choice rule should be predicated on maintaining or improving the current level of quality in the HSTD program.  However, to ensure that the freedom of choice rule is not being abused, encounter data should be periodically examined for regions with higher numbers of single passenger trips and regions in which the broker has a substantial percentage of disoriented and non-ambulatory passengers.  If OTD determines that the freedom of choice rule is being abused or having particularly negative effects on the region, OTD should intervene by performing an independent review of 07 and 08 provider selections.


Rep. Palumbo asked why there would be 15 or more riders in a vehicle, and were they all eligible recipients. Mr. Hewlett stated that it was normal to have large groups from Adult Day Care centers to ride in a van that could seat 15 people. He stated that all 15 riders should be Medicaid eligible recipients who are a part of the program. He did say that on occasion there might be an escort involved, especially if a recipient was confused and needed additional assistance. 


Rep. Palumbo asked if escorts were unable to drive or did they have a vehicle but chose not to use it to transport an eligible recipient.  Mr. Hewlett explained that in order to be eligible for the program, a recipient could not be in possession of a vehicle. If an escort who lives with an eligible recipient has a vehicle, then technically that recipient would not be eligible for the program.


            Rep. Palumbo asked if  a recipient would be eligible for the program if the escort owned a car, but did not live at the residence with the recipient. Mr. Hewlett stated that type of situation would be in the gray area of eligibility.  He stated that the statute refers to ineligibility only if the recipient has a vehicle at the home.


            In continuing, Mr. Hewlett stated that the steady increase in system usage was a concern. He stated that Kentucky’s population was aging at a faster rate than the national average, which could have long-term implications for the HSTD utilization rate. He stated that recipients served by Adult Day Care and Supports for Community Living (SCL) waiver programs were relatively heavy users of the system.


            Rep. Palumbo stated that she would like to know at some point the financial consequences of Adult Day Care centers owning their own transportation vehicles.


            Mr. Hewlett stated that another issue addressed in the report was the administrative structure of the program. He stated that because new broker contracts were to be negotiated before July 2005, staff recommended examining the distribution of regions by usage rates, and geographic and demographic similarities. He said that in examining other states, staff found that Georgia operates a similar brokerage system, but only had five regions.

            Mr. Hewlett stated that communication between the Department for Medicaid Services and the Transportation could be improved.  He said that OTD had not been furnished with a list of covered services from Medicaid, and that the brokers were requesting guidelines for providing escort services to recipients who were in need of escorts.  He also stated that Medicaid should share projections of the SCL population to the Transportation Department for planning.  He said that OTD should examine the administrative cost controls used in other states, and those controls most relevant to Kentucky should be adopted.


            Mr. Hewlett said that the report offered three recommendations to control and contain future cost growth:

·        The Office of Transportation Delivery, working in cooperation with the appropriate Health Services Cabinet division, including the Department for Medicaid Services, should gather and examine data on usage by service providers who also provide transportation services.

·        Transportation, Medicaid Services, and other interested parties should examine the distribution of regions across the state. Reducing administrative costs should be a goal in any such regional adjustment, but this should be balanced against the need to guarantee the overall quality and effectiveness of the system.

·        Officials of the Office of Transportation Delivery and the Department for Medicaid Services should consult with their counterparts in other states to determine the cost-control measures that would be practical for Kentucky’s capitated system.


Mr. Hewlett stated that officials with the Department of Medicaid Services and the Office of Transportation Delivery had not disagreed with any of the report’s recommendations and both agencies had started implementing the recommendations.


Rep. Hoffman stated he was pleased that the agencies were responding to the report and to the recommendations.


Rep. Arnold asked what would happen if a broker did not have enough money to cover the high increase in the number of eligible recipients. Mr. Hewlett stated that in the short term, the broker would have to absorb the costs. He stated that there is a provision that if there was a large increase in the SCL population within their region, then the broker could apply with the OTD for an adjustment. 


Sen. Stine asked OTD what recommendations were being implemented as a result of the report, and also, how did the Office of Transportation Delivery feel about the recommendation regarding the merging of regions.


Mr. Hewlett introduced Cindy Stoops, Branch Manager, Division of Financial Management, Department for Medicaid Services.


Ms. Stoops stated that OTD had been able to operate the program for the last four years, using the same amount of dollars, for more transportation services.


Ms. Bourne stated that Kentucky’s program was being used as a model nationally. She stated that OTD would be examining the possibility of merging some regions.  She said that OTD had been working, per the recommendations, on improving the rider surveys and the quality improvement plan.  She said tracking error data and matching brokers’ financial statements against encounter data have been implemented. She explained that the survey for providers would be in place by the end of the year; a new form had been developed requiring that recipients in all brokerages complete the form for proof of their freedom of choice rule; OTD will be imposing caps  for all regions statewide with transportation providers that also provide Medicaid services – effective July 1, 2004 for the FY 2005 year;  and Transportation and Medicaid Services are examining the current distribution of regions and should have recommendations for FY 2006 (all regions will be rebid for services for FY 2006).


Sen. Borders asked if it would be more feasible for a person to pay a private individual $5 for a trip to the doctor, rather than having to use an ambulance costing $200. Ms. Stoops stated that there were rules regarding the use of an ambulance for transportation, and unless it was unsafe for him to ride in a taxi or a transit bus, then he should not be using an ambulance as a form of transportation.  She said he could use the Human Service Transportation Delivery program much cheaper than paying for an ambulance.


Sen. Borders asked if OTD could give the man a voucher so he could pay the private individual transporting him to the doctor. Ms. Stoops stated that a broker could enroll a private individual as a private auto provider, and then that individual could be paid the state mileage rate.


Rep. Thompson asked if the recent increase in gasoline prices would cause complications in the program.


Ms. Bourne stated that gasoline prices would cause a problem.  She said that the program’s budget had zero growth in the last three to four years, and it was painful for the providers and the brokers.


Ms. Stoops stated that the brokers would need to calculate the increase in gasoline prices and bid for contracts accordingly.


Rep. Thompson asked if OTD was projecting losses of brokers and providers as a result of high gasoline prices. Ms. Stoops stated that Medicaid, as an optional service,  must provide transportation services.  She said that OTD should be able to continue to do that, but it was not known if the department could still provide the same level of services at the current rate of $48 million a year.


Rep. Thompson asked if it was realistic to think that the OTD could continue providing the same level of services for the current budget of  $48 million.


Ms. Stoops stated that she felt there was still room within the program to find more efficient ways of  cutting costs.


Ms. Shepherd stated that one of the contractors in her region was putting in a new computerized system that should help coordinate trips and eliminate individual trips by grouping recipients together.  She stated that subcontractors were experiencing financial difficulties because of the increase in gasoline prices.


Ms. Bourne stated that money had been getting tighter for the last two years, and if it continued to get tighter then something would have to give.


Rep. Baugh asked if the program could pay for out-of-state trips.


Ms. Bourne stated that the program could pay for out-of-state trips within a 100 mile radius outside the border.


Ms. Stoops stated that Medicaid has a small, separate out-of-state transportation fund.


Rep. Baugh asked if it was true that you could take a person 150 miles to a hospital in Kentucky, but could not take that same person 50 miles to a hospital in another state. Ms. Bourne stated that there are times when operating authority becomes an issue.  She stated that Kentucky’s operators could go into another state, but sometimes they cannot pick up.  She stated that Kentucky had been able to work with Ohio, but not with Tennessee.


Rep. Baugh stated that the doctors in his area routinely send patients to Nashville, and it was not uncommon for his folks to have their primary care physicians in the Nashville area.


Ms. Stoops stated that they were aware of the out-of-state problems and the department intended to look further into reciprocity with border states.  She stated that out-of-state trips could be done if the round trip totaled 100 miles, and that the person was brought back. 


Rep. Baugh asked if the program worked with VA hospitals. Ms. Stoops stated that transportation was provided for all Medicaid services regardless of whether it was to an enrolled provider. 


Rep. Butler asked why there was such a big difference in utilization rates throughout the regions. Ms. Bourne explained that Region 5 had many Adult Day Care centers and Supports for Community Living programs; Region 16 has very few.


Rep. Palumbo asked if recipients were required to use accessible public transportation if available. Ms. Bourne explained that brokers could coordinate bus passes.


Sen. Borders asked what the Department of Medicaid Services would do if the costs of the program continued to increase for the Adult Day Care and Supports for Community Living populations.


Ms. Stoops stated that issue would have to be addressed at the federal level.


Ms. Bourne stated that there could be small ways to reduce the costs such as reducing services from seven days a week to five days a week.


Rep. Hoffman asked Mr. Hewlett for clarification on why the Adult Day Care usage was increasing, and what did the report recommend for controlling that cost. Mr. Hewlett stated that the report recommended that OTD put a cap on the amount that could be paid to a provider, per month or per day.  He said that OTD had already implemented the recommendation, and caps would be effective July 2004.


Rep. Hoffman asked why Georgia was used an example in comparing Kentucky’s program to other states, and how could Kentucky benefit from reducing the number of regions.  Mr. Hewlett stated that Georgia’s broker system is similar to Kentucky’s, and that they also have rural areas, metropolitan areas, and some mountainous areas.  He said that staff wanted to show that a brokerage system could be done with fewer regions with some savings to administrative costs.  He said it was important that any restructuring of the regions be done without jeopardizing the satisfaction rate and services. 


The report Human Service Transportation Delivery: System Faces Quality, Coordination, and Utilization Challenges was adopted by roll call vote, upon motion made by Rep. Baugh and seconded by Sen. Borders.


Rep. Hoffman reminded the committee that staff is currently working on four studies: Kentucky Transitional Assistance Program (K-TAP); Uncollected Revenues and Improper Payments; Adult Protective Services, Phase II; and Improper Computer Use by State Employees.


Rep. Arnold stated that he had received several telephone calls recently regarding the Underground Storage Tank problem. He said that there did not seem to be any closure for the folks who had removed their storage tanks over six years ago. He asked that the committee consider the issue as a study topic if no other committee was looking into the problem.


Meeting adjourned at 11:30 a.m.